FC: SEC finds new way to spend tax dollars: Creating fake companies

From: Declan McCullagh (declanat_private)
Date: Fri Feb 01 2002 - 02:14:05 PST

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    ---------- Forwarded message ----------
    Date: Thu, 31 Jan 2002 05:44:57 -0800
    From: Jack Dean <JackDeanat_private>
    To: Declan McCullagh <declanat_private>
    Subject: Fake sites aim to teach investors a lesson
    Our tax dollars at work . . .
    Fake sites aim to teach investors a lesson
    January 30, 2002
    WASHINGTON (AP) -- McWhortle Enterprises Inc. seems like the perfect
    investment for the post-September 11 world: a solid company, praised by
    analysts and customers, selling a handheld biohazard detector guaranteed to
    beep and flash in the presence of anthrax or other deadly germs.
    Only one problem: The company doesn't exist.
    McWhortle Enterprises is a government hoax cloaked in respectability and
    planted on the Internet, waiting to deliver a lesson about the risks of
    online investing to unsuspecting consumers.
    The Securities and Exchange Commission, the principal agency behind the
    fictitious company, was announcing Wednesday that it has seeded the Internet
    with a series of such Web sites laying in wait to say "gotcha" to naive
    investors, according to a source familiar with the project.
    The SEC would only say that it was holding a news conference to discuss
    "investor education initiatives."
    Barbara Roper, the Consumer Federation of America's director of investor
    protection, said she has no problem with the SEC's unorthodox methods.
    "There's clearly no intent here to do anything but educate the public in a
    way that might actually catch people's attention and make them realize they
    were that close to being scammed," she said. "You need to make the risk real
    to people."
    On Friday, the SEC issued a fake news release on behalf of McWhortle, saying
    the company would go public Wednesday, with company President Thomas
    McWhortle III holding a news conference at SEC headquarters. The release was
    distributed mainly to Web sites by a service for financial news. Financial
    news agencies that received the fake release were warned.
    After the release was sent, the McWhortle Web site received more than
    120,000 visits, the source said.
    Jack Dean, Senior Partner         JackDeanat_private
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